Theory of Production

A production function shows about the relationship between

• Input and cost

• Outputs and cost

• Products and cost

• Input and Output

The average amount of output produced by each labor employed is

• TP

• MP

• AP

• Production Function

Which of the following is NOT considered to be fixed input?

• Factory buildings

• Offices

• Raw material

• Efficient managers

Long run refers to the time period in which

• all inputs cannot be increased

• all inputs can be variable input

• there is at least one variable input

• there is at least one fixed input

The total output produced by 4 units of labor is 25 units and that of 5 units of labor is 40 units. The marginal product of the fifth unit of labor is

• 15 units

• 25 units

• 40 units

• 65 units

The law of decreasing returns begins when the marginal production curve___________

• reaches a maximum point

• rises

• falls

• intersects X axis

______ shows the overall output generated at a given level of input:

• Cost function

• Production function

• Iso cost

• Marginal rate of technical substitution

The marginal product curve is above the average product curve when the average product is :

• Increasing

• Decreasing

• Constant

• None

When the output increases in higher proportion than increase in inputs, the returns to scale is __________________.

• constant

• increasing

• decreasing

• negative

Marginal product curve and the average product curve intersect

• at the maximum point of the marginal product curve

• where total product is at a maximum

• where marginal product equals zero

• at the maximum point of the average product curve